The End of the World is Just the Beginning: Mapping the Collapse of Globalization

by Peter Zeihan

This is the way the world ends Not with a bang but a whimper. —T. S. Eliot

Should we be so lucky. —German proverb

The world of the past few decades has been the best it will ever be in our lifetime. Instead of cheap and better and faster, we’re rapidly transitioning into a world that’s pricier and worse and slower. Because the world—our world—is breaking apart.

The 2020s will see a collapse of consumption and production and investment and trade almost everywhere.

The coming global Disorder and demographic collapse will do more than condemn a multitude of countries to the past; it will herald the rise of others.

Fourth, not only despite the global churn and degradation, but also in many cases because of it, the United States will largely escape the carnage to come.

The 2020s are not the first time the United States has gone through a complete restructuring of its political system. This is round seven for those of you with minds of historical bents. Americans survived and thrived before because their geography is insulated from, while their demographic profile is starkly younger than, the bulk of the world. They will survive and thrive now and into the future for similar reasons. America’s strengths allow her debates to be petty, while those debates barely affect her strengths.

The biggest restriction of this new industrial era was no longer muscle, water, or wind—or even energy in general—but instead capital. Everything about this new era—whether it be railroads or highways or assembly lines or skyscrapers or battleships—was, well, new. It replaced the infrastructure of the previous millennia with something lighter, stronger, faster, better . . . and that had to be built up from scratch. That required money, and lots of it. The demands of industrialized infrastructure necessitated new methods of mobilizing capital: capitalism, communism, and fascism all emerged.

The American story is the story of the perfect Geography of Success. That geography determines not only American power, but also America’s role in the world.

The post–Cold War era is possible only because of a lingering American commitment to a security paradigm that suspends geopolitical competition and subsidizes the global Order. With the Cold War security environment changed, it is a policy that no longer matches needs. What we all think of as normal is actually the most distorted moment in human history. That makes it incredibly fragile. And it is over.

The British may have blazed the path to development, but it was the Germans who paved it for the rest of us.

they fell, much of their progress fell with them. The American-led Order (big O) did more than change the rules of the game; it institutionalized order (little o), which in turn allowed industrialization and urbanization to spread everywhere.

A precious few countries have managed a high degree of development while simultaneously avoiding a collapse in birth rates. It is . . . a painfully short list: the United States, France, Argentina, Sweden, and New Zealand.

In 2019 the Earth for the first time in history had more people aged sixty-five and over than five and under. By 2030 there will be twice as many retirees, in relative terms.

The Eisenhower Interstate Act of 1956 enabled the national road systems that enabled the former soldiers to settle anywhere.

This combination of vulnerability and integration could have only occurred in a security environment in which an external power forced everyone to play nice. Yet even with American overwatch, East Asia never developed a regional system of cooperation, or even diplomatic pressure release valves that fall short of military exchange. China hates Japan, Japan (perhaps now subconsciously) wants to colonize Korea and parts of China, Taiwan wants a nuclear deterrent, and the South Koreans trust no bitch.

The third region to watch out for is Europe. We think of modern Europe as a region of culture, democracy, and peace. As having escaped history. But that escape is largely due to the Americans’ restructuring of all things European. What lies under the historical veneer of calm is the most war-torn and strategically unstable patch of land on the planet. Modern Europe is the purest distillation of the heights and complete artifice of the Bretton Woods system.

The Quebecois once infamously paid their troops with pieces of playing cards.* Imperial Japan issued cardboard currency due to wartime metal shortages.*

It can occur with bureaucrats assaulting economics. Rather than gobbling up someone else’s resources, some governments choose to gobble up their own from an adjacent sector. The Tang Dynasty followed such a perpendicular course. Rather than expanding the empire physically to source more silver, they instead expanded the list of metals that “backed” their currency to include copper. The Tang’s adoption of copper as currency succeeded at stabilizing the financial system, but at the cost of causing empire-wide metals shortages that enervated . . . everything else.

Even better, the Americans were perfectly willing to provide the World War II Allies with anything they needed—oil or fuel, steel or guns, wheat or flour—so long as they were paid in gold. By war’s end the U.S. economy wasn’t only far larger and that of Europe far smaller. The U.S. dollar wasn’t just the only reasonable medium of exchange in the entire Western Hemisphere: it had sucked the very metal out of Europe that would have enabled a long-term currency competitor anywhere in the Eastern Hemisphere.

Between continental Europe’s woes and insufficient supplies of the British pound, pretty much everyone in Europe abandoned their precious-metals pegs and shifted to a system where their own currencies were backed by none other than the U. S. dollar (which was in turn backed by gold . . . that had until recently been European).

American firms entered former Soviet republics—most notably Kazakhstan and Azerbaijan—to bring ever-larger volumes of crude to the world. As always, the focus was on diversity and security of supply, leading the Clinton administration to push for circuitous pipeline routes to bring as much of the new flows to the global market as possible without utilizing Russian territory.

Throughout the entire period of 1945 on, the process earned the Americans no small amount of umbrage, from . . . nearly everyone. The Europeans resented losing their colonies. The newly freed colonies disliked American efforts to corral them into a bloc to contain a country, the Soviet Union, that few had had any previous contact with. The Arab world didn’t appreciate the Americans forcing their energy cog into the Bretton Woods machine (much less attempting to make them bedfellows with the Israelis). The Mexicans begrudged Washington’s heavy-handed approach. The (post-Soviet) Russians hated how the Americans expressly worked to undermine their influence in their own backyard. The Iranians really didn’t appreciate the coup.

What had begun as an effort to subsidize a military alliance with American crude had devolved into a bloated, unsustainable, and above all expensive mess that the Americans themselves were now economically dependent upon. With the Cold War’s end, the Americans may have wanted to take a less active role in global affairs, they may have wanted to disengage, but a single global oil price meant that doing so would risk instability, supply shortages, and oil prices so high as to wreck the American economy. The Americans had become economically trapped in their own outdated security policy.

Price-insensitive demand drove up the price of all globally available commodities, oil included. Third, in 2002 a very unsuccessful coup in Venezuela led to a very successful political purge of the country’s state oil firm—a purge that focused on the technocrats who produced the oil. The country’s energy sector never recovered. Fourth, in 2003 the Americans invaded Iraq, taking all its oil output offline. The country didn’t return to prewar levels of output for sixteen years. Between higher demand and lower supplies, oil prices steadily climbed from below $10 a barrel in 1998 to nearly $150 a barrel in 2008.

Factor out captive supplies in places like North America, the North Sea, North Africa, or Southeast Asia, and eminently disruptable supplies from the Persian Gulf and former Soviet space, then put supplies for local demand in places like North America and Russia into a different bucket, and total exportable, kinda-sorta-reliable supplies globally only amount to a paltry 6 million barrels per day . . . versus a global demand of 97 million.

No two crude oil streams have exactly the same chemical makeup. Some are gooey and laden with impurities, most commonly sulfur, which can make up to 3 percent of the crude oil by volume. Such crudes are called “heavy sours.” Some, like Canada’s oil sands, are so heavy that they are solid at room temperature. Others are so pure they have the color and consistency of nail polish remover and are called “light sweets.”

The Europeans, for example, love diesel, and Russia’s Urals blend (a medium/sour crude) is a pretty good feedstock for refining diesel. Interrupt Urals flows, replace Urals with a different crude grade, and the Europeans are going to face serious product bottlenecks even if they can somehow keep their refineries running at their designed capacity.

We’re looking at a lot more than 1 percent run-loss moving forward. Most of the world’s refineries were designed to run on lighter, sweeter crudes because they have fewer contaminants and so are easier to process.

I’m absolutely a believer in the technology when it’s matched to the correct geography.

More likely, EVs with today’s technology will work only if we double down on the very energy sources that environmentalists say we’re trying to cut out of the system.

We don’t know everything about the world of energy, but we know for certain that there is not enough lithium ore on the entire planet to enable a rich country like the United States to achieve such a goal, much less the world writ large.

Many particularly unlucky people will be stuck with something called lignite, a barely-qualifies-as-coal fuel that is typically one-fifth water by weight and is by far the least efficient and dirtiest fuel in use today. Germany already today uses lignite as its primary power input fuel because greentech is so woefully unapplicable to the German geography, and yet the Germans—for environmental reasons—have shut down most of their other power-generation options.*

Megawatt of electricity-generating capacity for megawatt of electricity-generating capacity, greentech requires two to five times the copper and chromium of more traditional methods of generating power, as well as a host of other materials that do not feature at all in our current power plant inputs: most notably manganese, zinc, graphite, and silicon. And EVs? You think going to war for oil was bad? Materials inputs for just the drivetrain of an EV are six times what’s required for an internal combustion engine. If we’re truly serious about a green transition that will electrify everything, our consumption of all these materials and more must increase by more than an order of magnitude.

A typical 100-kilowatt-hour Tesla lithium-ion battery is built in China on a largely coal-powered grid. Such an energy- and carbonintensive manufacturing process releases 13,500 kilograms of carbon dioxide emissions, roughly equivalent to the carbon pollution released by a conventional gasoline-powered car traveling 33,000 miles. That 33,000-miles figure assumes the Tesla is only recharged by 100 percent greentech-generated electricity. More realistically? The American grid is powered by 40 percent natural gas and 19 percent coal. This more traditional electricity-generation profile extends the “carbon break-even” point of the Tesla out to 55,000 miles. If anything, this overstates how green-friendly an electric vehicle might be. Most cars—EVs included—are driven during the day. That means they charge at night, when solar-generated electricity cannot be part of the fuel mix.

Moly is valued for its ability to weather extreme temperatures without significantly shifting form. Not extreme temperatures like when you are vacationing in Vegas in August, more like extreme temperatures when you are under napalm attack. If done right, moly-alloyed steel even becomes a superalloy, a material that maintains all its normal characteristics even when within easy reach of its actual melting point.

Unlike the Northern Europeans, who integrated their peoples early on by extending government writ up and down river valleys into ever-larger polities and so take to things like supply chains naturally, the Italians were a series of disconnected city-states from the fall of Rome right up to formal unification in the late 1800s. Italian manufacturing is local, and viewed less as an industry and more as a point of artistic pride. Italians don’t do assembly lines, or even regional integration. They don’t manufacture. They craft. As such, any products that come out of the Apennine Peninsula are either absolutely, shockingly ridiculous in their quality and beauty (think Lamborghini) or absolutely, shockingly ridiculous in their lack of quality and beauty (think Fiat).

British manufacturing is as hyperspecialized as Turkish manufacturing is hypergeneralized.

Jordan is a borderline failed state even with unlimited American security and economic support and de facto Israeli management.